In the hope we’ll become customers, the companies that help us trade stocks spend hundreds of millions of dollars per year on things like talking baby ads at the Super Bowl.
And we give brokerages much of their marketing budget back in the form of commissions of $10 or more for every single stock trade we make.
By simply promising to drop those fees last December, a new no-commission brokerage called Robinhood got nearly half a million people to sign up to try its service.
While Robinhood still isn’t ready to launch, it’s getting closer. “The goal is to make the process of a trade as simple as hailing an Uber or posting a picture on Instagram,” said co-founder Vlad Tenev.
“It’s a financial company that has grown with the virality of an Internet company,” added Tenev’s co-founder Baiju Bhatt.
At 27 and 29 years old, Tenev and Bhatt both have side-swept boy-band hair and the swagger that comes with being Stanford grads who’ve raised seed money for their startup from Andreessen Horowitz and Google Ventures.
They both put in some time on Wall Street — well, not really; Bhatt spent nine months at a trading firm straight out of college — but soon after they set off together to build financial technology startups in New York. The duo moved back to California to start Robinhood.
Now Robinhood has raised an additional $13 million — for a total of $16 million — led by Index Ventures. Also in the round: financially focused Ribbit Capital, Howard Lindzon of StockTwits, Box CEO Aaron Levie, Path CEO Dave Morin, Jared Leto, Snoop Dogg and Nas.
With 20 people working on the company in Palo Alto, Tenev and Bhatt said they expect to release an app to the public by early 2015.
Robinhood now has legitimacy as a FINRA-approved broker-dealer, a process that took more than a year, many stacks of paper and a compliance team led by a former E-Trade executive. Tenev and Bhatt plan to make money through a combination of lending margins, cash balances and an API available to investment advisers and other partners. Without a big marketing budget, they say, that should be plenty.
In these early days, Robinhood is already fulfilling its founders’ aspiration of appealing to young people: 80 percent of Robinhood’s hundreds of thousands of initial signups came from 18- to 29-year-olds, they say.
“Perceived trustworthiness is the top concern of a financial institutions. That’s why they have storefronts and marble buildings,” said Bhatt.
Tenev interjected — “Columns and gargoyles and stuff.”
“But when I think of companies that are trustworthy, I think of ones that make things happen seamlessly and have exceptional engineering that just works,” said Bhatt.
Robinhood’s goals extend past being a hip, young mobile-app-based brokerage, though.
“The stock market is the best-performing asset class,” said Tenev. “And people should get involved earlier in their lives because it’s compounding. People should have access to markets.”
Broader access — even if it starts with investing in market indexes and trendy stocks like GoPro and Apple — will be good for everyone, argued Bhatt. “Equity markets will be healthier with greater participation,” he said.
This article originally appeared on Recode.net.